ab 6 January 2025 Global Research China Industrials Going global: 'China+1' investment plan tracker (2024) UBS's quarterly tracker gauging 'China+1' progress under going global Our China 'going global' tracker follows the country's progress under the China+1 strategy on a quarterly basis (from Q124). In Q424, the overseas investment intentions for LatAm and ASEAN changed—investment plans in ASEAN increased notably in Q424 while investment interest in LatAm continued to decline YoY. We continue to expect goi ...

Industry or Company Involved - **China's Economy** Key Points and Arguments 1. **China's Economic Outlook in 2025 hinges on two factors: external tariffs and domestic stimulus**. The US tariffs are expected to phase in from 25Q2 and increase by 15% in a staged manner, impacting China's exports and GDP. Domestic policy is expected to become more expansionary, but not a decisive shift from the current real-growth-targeting and reactive easing mode. 2. **Tariff Risks**: The baseline assumption is a 15% annualized increase in tariffs, similar to the 2018-19 trade dispute. The US has indicated a desire to strengthen oversight on tariff evasion, but implementation may be challenging due to China's dominant role in global manufacturing. 3. **Trade Diversion**: The US has indicated a desire to strengthen oversight on tariff evasion, and we do anticipate meaningful measures to close such "loopholes" through third countries and a crackdown on de minimis shipments. Implementation, however, may prove challenging, given China's dominant role in global manufacturing. 4. **Impact of Tariffs**: A 15% tariff hike with partial diversion will slow China's exports by -6.0% and China's GDP by –1.0% ceteris paribus. 5. **RMB Depreciation**: The RMB depreciation pressure is real under tariff threats. Amid trade dispute 1.0, USDCNY responded to almost every announcement of tariffs and deals. Based on this sensitivity, USDCNY could reach 7.7-8.0 under 60% tariffs, and in the escalating stage, the markets could price in extreme scenarios. 6. **Confidence Problem**: Two years after reopening, social confidence is still weak. The confidence issue appears broad-based and entrenched now. Weak sentiment would continue to weigh on the economy in 2025. 7. **Deflation Challenge**: China's longest streak of deflation drags on. The GDP deflator should remain negative in 24Q4E, the seventh consecutive negative reading. This is unprecedented for China, with a similar episode only in 1998-99. 8. **Policies**: China should and probably will navigate the turbulence with policy stimulus. The support would step up to offset potential tariff shocks, but not to reflate the economy. 9. **Monetary Easing**: Rate and RRR cuts will likely continue. The monetary policy stance is now officially stated as "moderately loose" by the Politburo and the CEWC. 10. **Fiscal Policy**: We expect overall government deficit to increase ~RMB2.5tr to RMB11.5trn for 2025. The central government could take up all the increase. 11. **Targeted Consumer Support**: Targeted consumer support would likely top policymakers' priority list for 2025. Following the recent pay hikes for civil servants, more mini measures could come through. 12. **GDP Growth**: We maintain our forecast that GDP growth could retreat to 4.2%YoY in 2025E after hitting 5.0% in 2024E. 13. **Inflation**: China may not find an easy way out of deflation in 2025E. We forecast CPI to average 0.6%YoY and PPI to decline -1.9%YoY in 2025E – no reflation. 14. **Consumption**: Retail sales could grow only 3.5%YoY in 2024E, setting the stage for rebound. Indeed, household savings rate stood at 38.0% in 24Q1-3, still notably higher than the pre-Covid 36.2%. 15. **Investment**: Property investment could record a fourth high single-digit or double-digit contraction in 2025. Policymakers are aiming for "stopping the decline of the sector and foster a stabilization," yet we think it is more about home prices and sales, instead of investment. 16. **Trade**: Exports look set to decline from the all-time high amid tariff uncertainties. Headline exports likely grew 5.4%YoY in 2024 with the momentum for volume even stronger. 17. **Key Risks**: The shock could be more significant especially in the case of a 60% universal tariff on China. Our current expectations are at best an educated guess, and we see risks largely balanced around this base case.

January 6, 2025 04:06 PM GMT PDD Holdings Inc | Asia Pacific Temu Progress Check: 12/24 Key Takeaways Exhibit 1: Number of countries that Temu has entered (fully entrusted model) Exhibit 2: Number of countries that Temu entered (semi-entrusted model) 1 0 3 18 25 1 8 15 11 7 0 5 10 15 20 25 30 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 # of countries that Temu entered (fully-entrusted model) Source: Temu website, Morgan Stanley Research Exhibit 3: Temu's monthly downloads 0 10 20 30 40 50 60 70 Sep-22 ...

ab 6 January 2025 Global Research China Property & Property Management 2025 outlook: destocking to persist Five themes in 2025 We expect some trends from 2024 to continue into 2025, including: 1) existing homes' share gains from new homes; 2) rental market's rising importance; 3) luxury malls' persistent challenges; 4) C-REITs: a rising asset class on lower rates; and 5) diminishing policy impact on physical and stock markets. In 2025, we expect declining trends in the residential new homes market with 10% ...

Summary of Key Points from the Conference Call Industry Overview - The conference call focuses on the semiconductor industry in China, particularly the progress in semiconductor localization and the impact of domestic demand subsidies amid limited tariff effects [1][2]. Core Insights 1. **Price Competition in Foundries**: Ongoing price competition in mature node foundries is noted, with some inventory digestion and China's subsidies for consumer electronics purchases contributing to this dynamic [2][3]. 2. **IC Design Sector Performance**: China's integrated circuit (IC) design sector is expected to reach CNY646 billion (approximately US$90 billion) in 2024, reflecting a ~12% year-over-year increase, but this growth lags behind the global semiconductor industry growth estimated at 19% [2][3]. 3. **Company Closures**: Over 14,600 Chinese semiconductor companies closed in 2024, primarily in consumer electronics, semiconductor component distribution, and analog sectors, indicating a normalization in the growth of China's chip design industry [2][3]. 4. **Price Reductions by Chinese Foundries**: Prices for 12-inch wafers from Chinese foundries have decreased by up to 40% compared to Taiwanese companies, with 20-30% discounts on 8-inch wafers. This pricing pressure has been ongoing since mid-2024 [2][3]. 5. **US Trade Investigation**: The Biden Administration has initiated a trade investigation into older Chinese-made "legacy" semiconductors, which may lead to increased tariffs. However, the direct impact on Chinese mature node chip companies is expected to be limited due to low export volumes to the US [2][3]. 6. **Stock Implications**: Caution is advised regarding mature node foundries like UMC and Vanguard due to competition from China, while a positive outlook is maintained for Chinese wafer fabrication equipment (WFE) companies like NAURA and AMEC due to aggressive capital expenditure plans [2][3]. Additional Insights 1. **Semi Equipment Imports**: China's semiconductor equipment imports were valued at US$29 billion from January to November 2024, marking a 20% year-over-year increase, although growth is decelerating [6][7]. 2. **High Bandwidth Memory (HBM) Development**: China is still behind in HBM technology, with local vendors only able to produce 4-8 layer HBM, while CXMT targets volume production in the second half of 2025 [7][8]. 3. **Self-Sufficiency Projections**: China's semiconductor self-sufficiency ratio is projected to reach 25% by 2026, up from 20% in 2023, driven by weak consumer demand and limited breakthroughs in advanced logic chips [28][29]. 4. **Market Dynamics**: The semiconductor market is experiencing a divergence in stock performance, with notable outperformance from companies like Espressif and GigaDevice, attributed to demand from AI applications [10][11]. Conclusion The conference call highlights the challenges and opportunities within China's semiconductor industry, emphasizing the impact of domestic policies, competitive pricing, and the ongoing transition towards greater self-sufficiency in semiconductor production. The insights provided are crucial for understanding the current landscape and future trends in the industry.

January 6, 2025 03:35 PM GMT China Property | Asia Pacific Weekly Database Tracker #1 Weekly primary unit sales were +49% YoY and -43% WoW. Weekly secondary unit sales were +67% YoY and -27% WoW. The total sell-through rate was 68% last week. Weekly primary unit sales in 50 cities were +49% YoY (vs. +21% YoY last week) and -43% WoW for the week ended January 5: Tier 1 city sales were +42% YoY (vs. +34% YoY last week) and -37% WoW. Tier 2 city sales were +65% YoY (vs. +22% YoY last week) and -46% WoW. Tier 3 ...

Industry and Company Overview * **Industry**: Energy sector, focusing on natural gas, oil, and related infrastructure and services. * **Key Companies**: Antero Resources (AR), ARC Resources Ltd (ARX CN), Baker Hughes (BKR), ConocoPhillips (COP), Cenovus Energy (CVE CN), Chevron (CVX), Expand Energy (EXE), TechnipFMC (FTI), Pembina Pipeline Corp (PPL CN), Shell (SHEL), Scorpio Tankers (STNG), Tenaris S.A. (TEN), ExxonMobil (XOM), YPF S.A. (YPF) Key Themes and Insights 1. **US Natural Gas Demand Growth**: * **Demand Pull**: Improved permitting and infrastructure development expected to drive additional gas-fired generation and pipeline construction. * **LNG Exports**: Expectation for lifting of the "LNG Pause" benefiting infrastructure and natural gas producers. * **Storage Situation**: Tightening storage situation into the winter of 2025-26 due to rising production and demand. * **Appalachia**: Significant growth potential in natural gas power demand, driven by pipeline expansions and data center demand. 2. **Global Oil Macro**: * **Non-OPEC Supply Growth**: Expected to match global oil demand growth in 2025. * **Iran Sanctions**: Potential impact on global oil supply and prices. * **China Demand**: Significant contribution to global oil demand growth. 3. **US Oil Future Role**: * **Shale Maturity**: Oil sentiment negative, but oversupply thesis unlikely to dissipate. * **US Supply**: Wide dispersion in US oil supply, driving uncertainty. 4. **LNG Outlook**: * **Oversupply Thesis**: Pushed to the right due to project delays and higher-than-expected demand. * **North American LNG**: Expected to grow significantly, driven by operating, under-construction, and proposed projects. 5. **Global Refining S&D**: * **Capacity Closures**: Indicate marginally tighter supply and demand in the second half of 2025. * **Refining Margins**: Expected to remain under pressure due to excess cash balances and concerns over demand growth. 6. **Energy M&A**: * **E&P Consolidation**: Significant room for further M&A in the E&P sector. * **Midstream Services**: Likely to follow L48 E&P consolidation. 7. **Midstream**: * **Strong Demand Fundamentals**: Underpin volume growth across key North American basins. * **Valuations**: Expected to re-rate higher due to central bank policy easing and solid growth outlook. 8. **Shipping**: * **Iran Sanctions**: Potential for stricter enforcement under the Trump administration. * **Tanker Utilization**: Expected to increase, driving up spot rates for VLCCs and tankers. 9. **International Capex**: * **Onshore Capex**: Expected to remain flat in 2025. * **Offshore Capex**: Expected to increase in 2025, but decelerating trend is clear. Stock Picks * **Buy**: AR, ARX CN, BKR, COP, CVE CN, CVX, EXE, FTI, PPL CN, SHEL, STNG, TEN, XOM, YPF * **Hold**: APA, BRY, CNQ CN, CHRD, CIVI, DVN, ENB CN, EOG, HES, KEY CN, MUR, NOG, PPL, RRC, SUBC NO, TRP CN, TEN, YPF Conclusion The energy sector is expected to see significant growth in natural gas demand, driven by US LNG exports and global demand. Oil demand is expected to remain strong, but supply concerns and geopolitical factors could impact prices. Midstream and services companies are expected to benefit from strong demand fundamentals and improving valuations.

J P M O R G A N Global Markets Strategy 02 January 2025 China/Hong Kong Monthly Wrap Dec 2024: the fourth year is the charm In 2024, China and HK equity indices reversed course after a three-year correction. MXCN/HSI/HSCEI/HSTECH rose by +2.7%/+3.4%/+5.1%/+2.8% in USD during December, for USD price returns of +16%/+18%/+27%/+19% during 2024. MXCN's large-cap high yielders were well bid as the 10Y CGB yield dipped to a record low of 1.68% (Figure 4Southbnd iflowsnt HKlised hgyilers & Figure 5MXCN andMXHK: Cy ...

更多资料加入知识星球：水木调研纪要 关注公众号：水木纪要 January 1, 2025 11:40 PM GMT China Property | Asia Pacific M Update Major Developers' December Sales Remained Decent CRIC preliminary sales data show contracted sales of 30 major developers we track down 10% y-y but up 11% m-m in December. SOEs continued to outperform with positive y-y growth. Major developers recorded decent December sales, with the top 50 and top 100 developers up 2% and 0% y-y, respectively (vs. -1% and -3% in November), and +22% and +28% m-m on seasonality. ...